2106 Expenses Are Now Basically Gone!!!

3 Replies

Good Morning BP,

If you've ever been denied for a loan because your unreimbursed expenses on Schedule A of your 1040's were too high, have it looked over again.

Fannie Mae just updated it's policies on this issue.  Here's the deal.

Say your wages last year were 120k and you wrote off 20k in 2106 expenses.  Lenders selling loans to Fannie and Freddie would only be allowed to qualify you off 100k.  Now as long as your 2106 expenses aren't 25% of your income or more it won't count against you.

Example:  If you make 100k and you write off 20k in 2106 expenses an uw will still be able to use 100k to qualify you.

However if you make 100k and your 2106 expenses are 25k or over, in this scenario the uw would have to qualify you at 75k.

This is really huge and another sign that Fannie is making it easier for the regular person to qualify for a home loan.

This will really help the following jobs sectors:

Drivers, contruction workers, sales people, and anyone else that pays for job related expenses but doesn't get reimbursed for the money they spend. And they write it off on line 21 of schedule A.

Make sure to use a loan officer or mortgage broker that has experience with investment loans and mortgages in general.  Also make sure your contact uses banks that have no OVERLAYS!!! In my opinion this is a major key to successfully financing properties through conventional lines.

I hope this helps and everyone have a wonderful day.

This is great to know! Thanks for the update, as Realtor and my partner who is self employed also expense lowering income causes some challenges.

This will open a lot of doors for people who write this off.